To Move Forward, We Must Learn from Our Progressive Past

Our contemporary billionaires, most Americans would agree, are exploiting our labor and polluting our politics. Can we shrink our super rich down to a less powerful — and more democratic — size? Of course we can. We Americans, after all, have already done that before.

Between 1900 and the 1950s, average Americans beat down plutocrats every bit as dominant as ours. A century that began with huge private fortunes and most Americans living in poverty would come to see sweeping suburban developments where grand estates and mansions once stood.

Most of us today, unfortunately, have no inkling that this huge transformation even took place, mainly because that exuberantly middle class America of the mid-20th century has disappeared. Those grand mansions have come back.

Does this super-rich resurgence make failures out of our progressive forebears, the men and women who fought to limit the wealth and power of America's wealthiest? Our forebears didn't fail, as I explain in my new book. They just didn't go far enough.

In The Rich Don't Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class, Isum up the incredible feats those progressives accomplished. They "soaked the rich" at tax time. They built a union movement that acted as a real check on corporate greed. They even tamed Wall Street.

But these great victories have long since faded. How can we get back on a plutocracy-busting track? We could start by revisiting those struggles of years past that came up short, those proposals that, had they become law, might have lastingly leveled down our super rich.

The Rich Don't Always Win explores many of these proposals. Here are three.

One: Require the rich to annually disclose how much they actually pay in taxes.

Eighty years ago, just like today, America's rich evaded taxes massively. If wealthy taxpayers knew their returns would be open to public inspection, reformers argued, they might think twice about this evasion.

In 1934, progressives actually added a disclosure requirement to the tax code. But Congress, after a swift super-rich counterattack, repealed it. Even so, the basic idea behind disclosure remains as powerful as ever. Just ask Mitt Romney.

Two: Leverage the power of the public purse against excessive CEO pay. Congress can't directly set limits on corporate compensation, and yesterday's progressives understood that. But Congress could impose limits indirectly by denying federal government contracts to firms that overpay their top executives.

In 1933, then-senator and later Supreme Court justice Hugo Black won congressional approval for legislation that denied federal airmail contracts to companies that paid their execs over $17,500, about $300,000 today.

The New Deal never fully embraced Black's perspective. We could now, by denying federal contracts to any companies that pay their CEOs over 25 times what their workers are making.

Three: Cap income at America's economic summit. In 1942, President Franklin Roosevelt proposed a 100 percent tax on individual income over $25,000. That would amount to $355,000 in today's dollars.

Congress balked. But lawmakers did set the top tax rate at 94 percent on income over $200,000, and top federal rates hovered around 90 percent for the next two decades, years of unprecedented middle class prosperity.

America's rich fought relentlessly to curb those rates. They saw no other way to hang on to more of their income. But what if we restructured the top tax rate of America's postwar years to give the rich a new incentive?

We could, for instance, tie the threshold for a new 90 percent top tax bracket to our nation's minimum wage. The higher the minimum wage, the higher the threshold, the lighter the total tax bite on the nation's highest incomes.

Our nation's wealthiest, under this approach, would suddenly have a vested interest in enhancing the well-being of our poorest. Years ago, progressives yearned to create an America that encouraged just that sort of social solidarity. They couldn't finish the job. We still can.

An additional thought. When income tax rates were much higher, companies invested more of their profits back into their plants, equipment, and employees rather than see it go to taxes. Use it or loose it.

As long as we say that we believe in a capitalist system, government should not be specifying what maximum salaries should be. Besides, there are many other categories of highly paid people that create social problems, both for others and themselves, namely, sports figures and entertainers in various media. The proper role of government is to do the "social engineering" of using the tax code to create the proper incentives. The approach of the 1950s, with its top rate of 94% (I recall it as 92%) for ordinary income in excess of #200,000, had the effect of inhibiting huge salaries, but not putting a cap on them. At the same time, the tax on long-term capital gains was around 20%, so people like Laurence Rockefeller still made plenty of money. He invested money, built businesses up and sold for large capital gains. That's the kind of motivation we want. We could make those taxes progressive, too, increasing the tax on long-term capital gains over, say, $100,000. In the 1950s, we had a huge debt from WW II, over 120$ of GDP in 1945, so people accepted the top rate of 92%. That wouldn't fly today, but a marginal rate of 70% on all ordinary income over $2 million today would do the job. One result of that would be that the huge salaries for football players would be structured to stretch out over many years, which would protect them from foolishly spending their money and ending up bankrupt. President Obama should be adding three categories to his proposal to increase marginal rates to 39.5% for income over $250,000. Namely, 50% for income over $1 million, 60% for income over $1.5 million, and 70% for income over $2 million.
Also, I agree with DanH that military spending could be greatly reduced (and I was in that industry).

I have to agree with Dr. Richard Wolff, a long time professor of economics at various top level universities who thinks our failure during the FDR years was leaving a Capitalist business structure in place with private boards of directors made up of selected individuals who are compensated for their time and are generally wedded to making decisions that benefit the investors and top management and an all powerful CEO who will eventually find a work around that will bypass any legislative restrictions or they will fund a high paid lobbyists who will make the legislation just go away. Dr. Wolff supports the creation of worker co-ops where employees share in the decisions and ownership of a company. There are several real world examples of this form of business around the planet and they range in sized from 8 to 10 employees to a giant corporation in Spain with over 100,000 employees that has been in existence for over 50 years. Like any business venture there is no guarantee of success but these businesses have some enormous benefits for it’s employees, they all vote on measures that effect the businesses future and it’s for sure that they would never vote to send their own jobs to China or hire managers at wages that are 400 times their own !

Even if we do not entirely boycott their products, we will be heard! These corporations are spending $millions in advertising dollars and KNOW that even a few dissatisfied customers can do untold damage to their product sales!

Then, divest your stocks of corporations not doing the right thing – or easier still, just tell your employer/stock broker of your desire to do so. That could be all that is needed!

We really CAN do so much with so little, but it is time to stop playing the monopoly game their way. Vote with our dollars and sense when American elections can be bought with consumer money! Our "election" has just begun!

www.350.org Oct 31, 2012 Tell Polluters: Pay For Sandy Relief, Not Climate Chaos - Deb responded after election 11/23/12:
Post-election, do you realize how many $millions you WASTED on this election between advertising* and "investing" in politicians, elections, pundits and capital costs for more of the same dirty fuels...all could and should have gone into changing your business model to wind, solar, geothermal, energy efficiency, building American infrastructure to include high-speed rail and highways with eco-friendly underpasses, "green" communities, hybrid vehicles, even oil/gas/coal-inflicted disaster reconstruction!

Restructuring and rebuilding would EARN YOU HONEST MONEY instead of destroying the only home any of us has with more pollution! Sounds like addictive thinking to me and addictions are suicidal, not profitable!

We, the American PEOPLE, are beginning to see through you and are in the process of divesting and boycotting ourselves of your products so you are throwing everything away for what? A little more short-term profit as the planet burns and a few people continue to be deceived?

Please share this with your Executives, Board of Directors and Shareholders.

Hopefully for all of us, most real people in your corporation are sane and humane enough to terminate unprofitable and deadly "business-as-usual." (Corporations are NOT people www.storyofcitizensunited.org )

Sincerely, Deb
*At least 50% of each media outlet is telling the truth - the only problem is which 50%? Of course any thinking person can tell their motives when their advertisers are no-such thing as "clean" coal, Exxonmobil supporting "education" and teachers based on their propaganda, BP promoting their oil-slicked Gulf of Mexico and even natural gas from Shell obtained by the dangerous and unnatural process of water, air and land pollution known as "fracking."

Since their cut in public funds, even NPR is now being sponsored by America's Natural Gas Alliance (ANGA).

My husband I laughed during the past legislative-buying season when CNN told the TRUTH:
"CNN, 2012 Election, brought to you by.......Exxonmobil!"

This is fun. FYI- We have quit State Farm Insurance after 25 years (cried with my agent) because they continue to be members of A L E C, (Am Legislative Exec Council writing far-right corporate laws to disenfranchise voters, Stand Your Ground, etc Be sure too Google United States of ALEC).

We don’t buy gas from Exxon (Valdez), Shell (Nigeria killers), BP (Gulf spill) or any organization connected with Halliburton (exempted by Cheney from Clean Water Act to frack us all).

I leave little notes in stores selling billionaire polluter Koch Brothers products like Dixie, Angel Soft, Brawny, Great Northern (Georgia Pacific), Lycra, Stainmaster (in fact Google it, there is an app for people who want to do the same!)

I find out which corporations are wasting their money on politicians like Romney, - for instance, I called Citibank and very nicely told the customer service gal of my concern and boycott for their waste of money on buying campaigns- she agreed with me!

Hey, I figured out why Grover Norquist oily lobbyist has so much power! He TOLD me himself on TV news the other day when he complained about Rep Peter King reneging on his 20-year old commitment not to raise taxes: Old Grover said it was like not keeping your commitment to pay your mortgage! The FACT is these Republicans ARE mortgaged to Grover and his corporate cronies by the fact that they will never get enough money in the primaries to run for office unless they sign their souls over to him!

I tell my Congress critters WE KNOW and will not tolerate their bad behavior. Reform campaign finance!

Corporations are not people. Money is not free speech. www.Movetoamend.org for government of the PEOPLE!

Today limiting income and wealth is a taboo subject. What this shows is the extreme control of the plutocrats on information that has become shameless propaganda. And yet nothing is more obvious. Nothing in this world is limitless. Not life itself, not happiness, not sadness, not health, not sickness... And everything must end in death. Ethically or philosophically, limitless income and wealth is an absurdity. To be extremely generous, $ 1 million a year net income, and $ 20 million wealth per family would more than enough. The existence of billionaires only shows the degree of human stupidity. For a true democracy to return, the plutocrats must disappear as a group. It's as simple as that.

Perhaps start with the idea of limiting top salaries 100 times the median wage/salary - a number that people can relate to more easily than 25. There are certainly plenty of CEOs whose compensation is way over that line, and it's harder to convince an average wage earner that his or her boss really has a social worth a hundred or more times their own.

Especially establishing some kind of linkage between top executive pay and what the lowest person on the line makes.

But i would be remiss if i didn't point out one thing, and that is that our hundreds of foreign bases and multiple trillion dollar wars are removing so much wealth from our economy that our standard of living will continue to decline no matter what. We need to restrict ourselves to only our very closest allies, and they have to learn to live more peacefully or cough up the dough for their defense. In particular, we should have no bases in Japan, Korea, or Germany so long after the conflicts there.

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